Real Estate Investment Trusts (REITs) are a game-changer for investors looking to take exposure to real estate as part of their portfolio.
It allows all investors - big and small - to make investments in property without putting up very high initial investment amounts.
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It allows all investors - big and small - to make investments in property without putting up very high initial investment amounts.
More 👇🏻
The problem with Real Estate:
While real estate is a popular investment avenue, it has its drawbacks. The initial investment amount is very high and it is very illiquid - it’s hard to sell real estate quickly and at the right price.
While real estate is a popular investment avenue, it has its drawbacks. The initial investment amount is very high and it is very illiquid - it’s hard to sell real estate quickly and at the right price.
REITs: What are they?
REITs are a new-age financial #product that allows investors to invest small amounts of money into real estate. The REIT pools in money from many investors and invests the money in income-generating real estate.
REITs are a new-age financial #product that allows investors to invest small amounts of money into real estate. The REIT pools in money from many investors and invests the money in income-generating real estate.
REITs: How do they work?
REITs invest the investors’ money into real estate that generates income - mostly in the form of #rent. This rent is then distributed to the investors #proportionally. REITs also trade on stock exchanges.
REITs invest the investors’ money into real estate that generates income - mostly in the form of #rent. This rent is then distributed to the investors #proportionally. REITs also trade on stock exchanges.
How do REIT investors make money?
REITs distribute most of their income (rent) in the form of #dividends. That apart, REIT investors also enjoy the benefit of property value appreciation which leads to the share price of the REIT to appreciate.
REITs distribute most of their income (rent) in the form of #dividends. That apart, REIT investors also enjoy the benefit of property value appreciation which leads to the share price of the REIT to appreciate.
REITs - Best of both worlds?
REITs give investors the best of both worlds – fixed income in the form of dividends (just like how you get fixed interest on deposits) as well as capital gains (just like how stock prices appreciate over time).
REITs give investors the best of both worlds – fixed income in the form of dividends (just like how you get fixed interest on deposits) as well as capital gains (just like how stock prices appreciate over time).
Advantages of REITs
REITs introduce the much-needed factor of liquidity in real estate investments. It is a good #diversification avenue as well. Moreover, REITs are managed by experts and provide #steady returns.
REITs introduce the much-needed factor of liquidity in real estate investments. It is a good #diversification avenue as well. Moreover, REITs are managed by experts and provide #steady returns.
Disadvantages of REITs
Since REITs distribute most income as dividends, there is little scope for reinvestment into the business and hence growth prospects are limited. Also, REIT investments are as risky as the general real estate market.
Since REITs distribute most income as dividends, there is little scope for reinvestment into the business and hence growth prospects are limited. Also, REIT investments are as risky as the general real estate market.
Would you invest in REITs?
For a more in-depth read check this out: blog.smallcase.com/reit-re-thinki…
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